Fed raises rate by 0.25% point

The Federal Reserve has made its latest move in the ongoing balancing act between controlling inflation and avoiding a recession. The central bank increased its key short-term interest rate by a quarter of a percentage point, a move that was widely expected and reflects a slowing in the recent inflation spike. The Fed’s statement after its two-day meeting acknowledged that “inflation has eased somewhat but remains elevated.”

Fed Chair Jerome Powell hinted that the central bank may halt its aggressive campaign to curb inflation after a “couple more rate hikes.” He emphasized that inflation has moderated but is still too high and that “we still think there’s work to be done there.” Powell also stated that the Fed has not yet made a decision on where interest rates will peak.

The latest interest rate hike brings the federal funds rate to a range of 4.5% to 4.75%, which is the highest it has been since the early 1980s. The Fed’s actions are expected to continue to slow economic activity and increase rates for credit cards, adjustable rate mortgages, and other loans. However, it will also provide a boost for bank savings yields for Americans, particularly seniors, who have seen low returns for many years.

In conclusion, the Federal Reserve’s latest interest rate hike is a signal that the central bank is continuing to balance the need to control inflation with the risk of causing a recession. The Fed may halt its campaign to curb inflation after a “couple more rate hikes” but has not yet made a final decision on where interest rates will peak.

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